Investment and Funds

Investment and funds

Investment funds are investment instruments that pool the funds of investors and invest it into an investment portfolio that is comprised of stocks, bonds, or other assets. Each fund is managed by a person that makes decisions about what to purchase and sell, and also charges fees for managing the fund. There are various types of investment fund, including unit trusts (UCITS), OEICs, and open ended investment companies (OEIGCs).

When investing in funds it is crucial to consider the motivation behind why you are doing this and the length of time you’d like to invest and your investor profile, which reflects your level of risk-taking. Younger investors, for instance may have more time to invest and be more willing to take on a higher risk level to ensure that they can grow over the long run.

As with saving, one of the best methods to lower risk is through diversification. This involves spreading your investments across a variety of asset classes that have lower correlations between their price movements, so that the fall in value of a class can be offset by gains in a different one.

Smart beta or low-cost investment is a different way to minimize risk. These are funds that are managed by passively which attempt to replicate changes of a specific index of the market such as the FTSE 100, or S&P 500 without the use this link need to make a judgement.